ANNUAL REPORTs
It is good practice to review your estate plan annually, at least briefly. At a minimum, check to see if any major changes have occurred in your goals and the authorized decision makers in your plan. The federal estate-tax exemption is the cumulative amount we can give away during our life and/or at our death without incurring a federal transfer tax of 40%. The Tax Cuts and Jobs Act, which became effective in 2018, doubled the previous exemption of $5 million, adjusted for inflation. For 2023, the estate-tax exemption is $12.92 million per person. Without further congressional action, this exemption will revert to $5 million (adjusted for inflation) in 2026.
For those with taxable federal estates, there are several strategies that can be employed to mitigate your future estate tax liability. Even those under this threshold should consider a detailed review of their projected net worth. The acceleration of this reduction has been an element of policy proposals in recent years and is a another reason to review your estate planning regularly.
Lifetime gifts may be outright gifts to heirs with no restrictions or may be completed through various types of irrevocable trusts providing resources to beneficiaries over time or for specific purposes. These trusts may offer tax advantages in addition to possible protections but do take time to develop. To ensure time for thoughtful planning that is consistent with your long-term goals, it is important to allow adequate time for any possible drafting by your attorney.
